The “bull market” is a term you have probably come across if you trade cryptocurrencies. Often used with the stock market, a bull market is a financial market condition that features a rise or expectation of a rise in prices over a short period. It has a tremendous effect on the mindset of investors because of the optimism and expectation of a rise in prices.
When Does a Bull Market Exist?
More often than not, a bull market exists when there is a 20% rise in market prices. The bullish trend is also characterized by an increase of more than 20% above its near-term lows. In recent years, cryptocurrency has shown a robust bull market.
What Led to the Crypto Bull Market?
The global crypto market experienced exponential growth between the years 2014 to 2021. The crypto bull market can be attributed to the scale of community involvement. The adoption of cryptocurrency is being facilitated by easy accessibility and increasing digitization.
Its regulation and legalization of sale, trading, and purchase in many developed countries are also some of the factors that have greatly driven the market growth. Here is an analysis of other factors that led to the crypto bull market:
An increase in the market cap of crypto is seen over the last years because of the availability of big online exchanges. This change was a result of the dramatic increase in cryptocurrency exchange's usability. Demand and supply are factors that also affect the value of cryptos. Since there is a limitation in the supply of cryptocurrencies, the prices rose because of their increased popularity.
The mass adoption of a currency leads to an exponential increase in its value. There has been a direct increase in the price of cryptocurrency because of the increase in demand since the total number of most crypto in the market is limited. Popular companies have been endorsing crypto, putting it in a position to be accepted as a means of transaction in the future.
Inflation of Fiat Currencies
If there is a fall in the price of fiat currency, then the price of crypto like Bitcoin goes up in relation to the currency. This is a phenomenon that can be seen today as the price of fiat currency falls. This led to the crypto bull market, as investors will be able to get more of that currency with the cryptocurrency coin they hold.
Increased Production Cost
Some other factors that affect the value of a cryptocurrency are the opportunity costs and direct costs of producing a coin. The higher the production cost of a coin, the higher the value will be. Coins like Bitcoin require a lot of energy and resource in mining; this explains why the value and price is high.
More Node Count
The measurement of the number of active wallets on an existing cryptocurrency network is known as the node count. The rise in the number led to the increase in the price of crypto. With more nodes, the community of a cryptocurrency becomes stronger and its value increases. More nodes give a cryptocurrency a better chance of overcoming a crisis.
Many factors led to the crypto bull market. Its long-term value has been determined by true mass adoption, usability, and safety. These and other factors raise optimism that cryptocurrency will be mainstream soon and that it will be available for everyday use.
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